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Gas Tax Swap

On July 1, Illinois and Ohio increased gas taxes by double digits: 19 cents per gallon and 10.5 CPG, respectively, followed by California at 5.6 CPG, all due to legislation passed this year or in 2017. Diesel tax hikes were even higher.

Reducing the number of traffic lanes to improve bike and pedestrian safety can be inherently controversial when auto travel times are increased, and it can upset motorists further when they learn gas taxes are funding those safety improvements.

On April 6, the Senate and Assembly passed a comprehensive transportation funding package that it had been unable to do for years, thanks to much deal-making by Gov. Jerry Brown. The gas tax will increase by 12 cents per gallon on November 1.

Last February, the state Board of Equalization voted to reduce the gas tax by 6-cents. On Tuesday, it voted 3-2 to continue the decrease by 2.2 cents. The vote is required by an arcane rule that translates into tax *decreases when gas prices fall.

Heretofore, California's transportation funding woes have largely been restricted to future projects, expressed as "deferred road and bridge maintenance." That just changed—now current budgets face a $754 million cut over five years.

Sen. Jim Beall's transportation funding bill has been renumbered for the special session and was amended on July 14 to include a 12 cents per gallon, or 40 percent, increase in the gas tax and a 22 cents, or 169 percent, increase in the diesel tax.

Carl Davis, Research Director of the Institute on Tax and Economic Policy (ITEP) writes where gas taxes used to fund transportation infrastructure increased, if only by decimal points, and about the aberration—the six-cent plunge in California.

The stars appear to be aligning for a 10-cent gas tax hike, thanks to a $59 billion backlog in bridge and road repairs that has even influenced anti-tax Republicans. It's been 20 years since the gas tax was increased.

This has been an eventful week for gas taxes. To update two posts that appeared recently, Gov. Terry Branstad of Iowa signed legislation that increases the gas tax by 10-cents on March 1. In California, a board voted to decrease the tax by six cents.

A proposal to cut the gas tax by 21 percent would dig a huge hole in the state's transportation budget. It comes from a requirement in 2010 fuel tax swap legislation that doubled the excise tax while reducing the sales tax on gas by 6 percent.

The greater Bay Area is enjoying a substantial increase in road maintenance funding from local measures, like bonds, city and county sales taxes, and development fees, part of a growing trend in compensating for a shortage of state gas tax funds.

The D.C. Council is going the way of neighbors Virginia and Maryland by approving new wholesale sales taxes on gasoline and diesel. In it's budget approved on May 22, the council swapped the current 23.5-cent excise tax for a new 8.3% fuel tax.

While state legislatures and governors are struggling whether to raise state gas, sales, or income taxes or user fees to fund transportation projects, an arcane state board of five elected members voted 3-2 to increase CA's gas tax by 3.5 cents.

The annual budget for Paso Robles' road maintenance fund went from $400,000 to $38,000 after Gov. Schwarzenegger and the legislature agreed in 2010 to a complicated gas tax maneuver dubbed the "fuel tax swap" to balance the budget.

The NYT looks at a provision in a state assembly bill to restore transit funding to beleaguered CA transit agencies by allowing voters in regions to approve gas fees. Not only was the provision dropped by the Senate - the governor vetoed the bill.

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